l Verizon 12:45 PM Reader View Available E connect Ovestion 2.00 peints Consider

Question

l Verizon 12:45 PM Reader View Available E connect Ovestion 2.00 peints Consider the following cash flows: What is the profitability index for the cash flows if the relevant discount rate is 9 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g, 32.161.) Profitability index What is the profitability index if the discount rate is 14 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g 32.161.) Profitability index What is the profitability index if the discount rate is 21 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g 32.161.) Profitability index ReferencesBek&Resources; Difficulty: 1 BaskcSein8.5 The Proitabili

Explanation / Answer

1 2 3 -29000 13900 15000 11400 PV factor @ 9% 1/((1+0.09)^1) 1/((1+0.09)^2) 1/((1+0.09)^3) 0.9174 0.8417 0.7722 Present value 12752.29 12625.20 8802.89 34180.39 profitability index   Sum of present values of cash flows / initial investment 34180.39/29000 1.179 1 2 3 -29000 13900 15000 11400 PV factor @ 14% 1/((1+0.14)^1) 1/((1+0.14)^2) 1/((1+0.14)^3) 0.8772 0.7695 0.6750 Present value 12192.98 11542.01 7694.68 31429.67 profitability index   Sum of present values of cash flows / initial investment 31429.67/29000 1.084 1 2 3 -29000 13900 15000 11400 PV factor @ 21% 1/((1+0.21)^1) 1/((1+0.21)^2) 1/((1+0.21)^3) 0.8264 0.6830 0.5645 Present value 11487.60 10245.20 6435.00 28167.81 profitability index   Sum of present values of cash flows / initial investment 28167.81/29000 0.971 please note: I could not see the figures clearly, but the logic and calculations / formulas are correct

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